Contract Right to Health Benefits Found by Judge

(CN) – An Alameda County judge ruled Tuesday that retirees of the Lawrence Livermore National Laboratory were University of California employees entitled to the system’s health care plan. The decision by Judge George Hernandez Jr. marks the first time that a contractual right to benefits for California public employees has been recognized. “The legal issue is whether the employees have a legal right to have health care through the university, or can the university change it as it likes,” Dov Grunschlag, who represented the retirees, said. “The judge has found this contractual right on the part of public employees for the first time.” Hernandez ruled that the UC Regents and the retirees had a mutual understanding over the nature of their health care plans, which were a component of compensation, and not merely a gift. “The university and petitioners reasonably understood that the university offered employee benefits, including retiree health coverage, to prospective and existing employees in exchange for their agreement to accept and remain in employment with the university,” Hernandez said in his statement of decision. Employees at the laboratory were originally offered health care from Lawrence Livermore National Security LLC, after it assumed management of the lab in 2007 from the UC system. However, the plans offered were more expensive than what the UC system offered, and the laboratory did not have the same established track record. These factors concerned retirees of the lab – who were UC employees when the system ran the lab – and eventually led to a class action against the UC system earlier this year. “They were concerned that the laboratory may change things since there was no contract with them,” Grunschlag said in a phone interview. “They could make any number of changes to what they have now, which was worse than what UC offers its employees.” In a separately filed order, Hernandez found that the regents were legally authorized to enter into contracts governing employment relations with the laboratory employees when it ran the lab. He also held that the regents took action that “clearly evinced a legislative intent to create private rights of a contractual nature enforceable against the regents,” the order said. It is unclear at this time whether the UC regents will appeal. Grunschlag is a partner at the San Francisco-based law firm Carter, Carter, Fries & Grunschlag.